ey-global-tax-policy-outlook-for-2015

South Korea
2.3 Tax policy outlook for 2015 — summary
Corporate income tax burden
Lower No change Higher
Personal income tax burden
Lower No change Higher
VAT/GST/sales tax burden
X
Lower No change Higher
X
X
2.4 Tax policy outlook for 2015 — detail
Corporate income taxes
•
announced 2015 tax reform proposals (the 2015 Proposal),
aimed at stimulating the domestic economy and laying the
2014, Korea’s National Assembly passed the 2015 Proposal,
new law will be effective for taxable years beginning on or
proposed changes are as follows:
• Corporate accumulated earnings tax: A new corporate
accumulated earnings tax will be imposed on excess cash
accumulated by large corporations whose equity capital
corporations that are members of an enterprise group with
restrictions on mutual investment.
• Change in the debt-to-equity ratio: Under the current
law, the debt-to-equity ratio in determining deductibility
of interest paid, including a discount fee, to a foreign
controlling shareholder is 3:1, i.e., a debt equals up to
three times the amount invested by the foreign controlling
shareholder. Any interest expense in excess of the debt-toequity
ratio will be treated as a dividend in general. Under
the 2015 Proposal, the debt-to-equity ratio is revised to
2:1.
• Extended statute of limitation period on tax evasion
involving cross-border transactions: The current 10-year
statute of limitation period is proposed to be extended to
15 years for cross-border tax evasion matters.
• Increased penalties on tax evasion involving crossborder
transactions: The 2015 Proposal introduces a new
by cross-border transactions. The new rate is 60% of the
amount of tax.
Taxes on wages and employment
• No major changes have been proposed.
VAT, GST and sales taxes
• No major changes have been proposed.
2.5 Fiscal stimulus in 2015
168 | The outlook for global tax policy in 2015